A company is doing a prototype for a project, but its not sure whether to proceed with
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Question:
A company is doing a prototype for a project, but its not sure whether to proceed with this prototype. If it does the prototype, it will cost it $100,000; and, of course, if it doesn't pursue it, there will be no cost. If you do the prototype, there is 30 percent chance that the prototype might fail, and for that the cost impact will be $50,000. However, if the prototype succeeds, the project will make $500,000. If you do not do any prototype, you're already taking a risk, the chance of which is 80 percent with a failure impact of $250,000. But, again, without a prototype, should you succeed, the project will make the same money as mentioned before. What should you do?
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